Résumé Trips Up New Yahoo Chief

Pressure is mounting on Yahoo Inc.'s board after revelations that the Internet company's recently hired chief executive's academic record was misstated.

One of Yahoo's largest shareholders gave an ultimatum that CEO Scott Thompson be fired by noon Monday or the investor "will consider it grounds for further action." Spencer Ante joins digits with an update on the evolving situation. Photo: AP.

On Friday, one of Yahoo's largest shareholders gave the company an ultimatum that Chief Executive Scott Thompson be fired by noon on Monday or the investor "will consider it grounds for further action."

The dissident investor, hedge fund Third Point LLC, first brought to light on Thursday that Mr. Thompson didn't earn a college degree in computer science as stated on Yahoo's website and recent regulatory filing. Yahoo acknowledged soon after that Mr. Thompson has only an accounting degree, citing an "inadvertent error," without providing further explanation.

The company said its board of directors was investigating the matter, and a person close to the board said Friday that it "wasn't rushing to judgment."

Separately on Friday, Yahoo is working on a new deal to sell a portion of its stake in Alibaba Group Holdings Ltd. back to the Asian company, people familiar with the matter said.

The resume misstep adds complications for a company that has had more than its share of management crises in recent years. The board spent about four months looking for a new chief executive, after it had fired Mr. Thompson's predecessor last year.

Mr. Thompson, who was hired in January, signed a regulatory filing published last week that stated to the best of his knowledge its contents were accurate. The document said Mr. Thompson had a Bachelor's degree in accounting and computer science from Stonehill College.

On Thursday, Stonehill College, a small Catholic institution 30 miles south of Boston, said that the school's computer-science program didn't begin until the early 1980s. A statement confirmed that Mr. Thompson, a Boston native, received a "Bachelor's of Science in Business Administration (Accounting)" on May 20, 1979.

ENLARGE

Yahoo's Scott Thompson
Bloomberg News

The 54-year-old Mr. Thompson, who hasn't commented on the issue, sent a brief email to top staffers on Friday afternoon, asking them to "stay focused" while the matter is being sorted out by the board, according to a person familiar with the matter.

Mr. Thompson looked visibly concerned after learning the news on Thursday morning during a quarterly off-site meeting with numerous executives, said a person familiar with the matter. He spent the day ducking into and out of meetings, this person said, and it wasn't clear whether any of his employees asked him about the matter.

Several Yahoo employees on Friday said they felt sadness and disbelief over the incident. They said it has damaged Mr. Thompson's credibility with his workforce.

A Yahoo spokeswoman declined to comment.

In the absence of evidence that Mr. Thompson actively misled Yahoo about his resume, Yahoo directors likely won't force him out, one person close to the company said. "Maintaining him as CEO of Yahoo at this time is more important than whether he had a computer science degree or not,'' this person said.

Some leadership experts agree.

"It would be catastrophic to Yahoo if they pulled him out," said Stephen Miles, head of Miles Group, an executive coaching firm in New York.

Yahoo's admission was a victory of sorts for Third Point, which owns nearly 6% of Yahoo shares, and its leader, Dan Loeb. The firm is waging a proxy fight against Yahoo in order to obtain seats on its board.

Third Point also called Friday for the resignation of Patti Hart, a Yahoo director who led the search that brought in Mr. Thompson.

Ms. Hart, chief executive of International Game Technology, couldn't be reached on Friday. Yahoo shares closed Friday down 1.6% at $15.50 on the Nasdaq Stock Market.

Numerous questions remain unanswered about the incident. For years Mr. Thompson's former employer, eBay Inc.'s PayPal unit, listed on its website that he had obtained a computer science degree in addition to an accounting degree. Yet eBay's regulatory filings about Mr. Thompson only mentioned the accounting degree, as do filings made by companies whose board of directors include Mr. Thompson, including F5 Networks Inc.

On Friday, an eBay spokesman said the company was still investigating the reasons for the discrepancy.

Both before and after Mr. Thompson's hiring at Yahoo, the incorrect biographical information was used repeatedly in descriptions of him in the press, on the website of a company whose board he sits on, on Yahoo's own website, and in connection with at least one conference at which he spoke several years ago.

On Friday Yahoo's website still hadn't corrected a page titled "Getting to know Yahoo's New CEO" in which the errant computer science degree is listed in one of the "six fun facts" about Mr. Thompson.

One colleague who worked closely with Mr. Thompson at PayPal said he was a "hard-working and detail-oriented" manager who peppered subordinates with questions to show his deep knowledge of their affairs.

He also showed off his "technical skills" by describing complicated computer-programming matters when meeting with executives such as John Donahoe, eBay's chief executive, this person said. "He always talked about himself as an engineer," this person said.

Yahoo hired Mr. Thompson after firing Carol Bartz, who had held the job since January 2009 but was unable to increase sales of online-advertising space on Yahoo's email, news and sports sites.

After the firing, Mr. Loeb asked that the company's veteran board members step down from the company, which had been losing market share to rivals such as Google Inc. and Facebook Inc. for years.

Mr. Loeb eventually proposed his own slate of directors to replace them, but Yahoo's board instead found replacements on its own. Mr. Loeb continues to insist that he and his slate of directors, which includes himself and two former top media-company executives, could help guide the company toward a brighter future.

Mr. Thompson has told his new colleagues at Yahoo that he had approached Yahoo's board directly to apply for the CEO position, said a person familiar with the matter.

A Yahoo spokeswoman previously declined to comment on the matter.

American corporate history is littered with examples of resume snafus, though the consequences for the executives have been varied.

In 2008 Gregory Probert lost his job as president and chief operating officer of Herbalife Ltd. after acknowledging he claimed a fake master's degree in corporate filings.

Similarly, David Edmondson resigned in 2006 as chief executive of RadioShack Corp. after admitting he had inflated his educational background.

Some executives have survived such flaps. In 2002, Bausch & Lomb Inc. rescinded a bonus for then-CEO Ronald Zarrella after learning his biography incorrectly claimed he had an M.B.A., but it refused his offer to resign. He retired in March 2008.

Since coming aboard, Mr. Thompson announced plans to cut 14% of Yahoo's staff and shift the company to take on more online-commerce initiatives.

In a deal being discussed with Alibaba, Yahoo, which owns about 40% of the Chinese e-commerce company, would sell between 15% and 25% of Alibaba back to the company, people familiar with the matter said. Alibaba would raise a few billion dollars in additional capital to fund the purchase, these people said.

For both companies, a deal would be a way to wind down what at times has been an acrimonious relationship. Alibaba would also regain more ownership control, while Yahoo could focus on its core U.S. business without the overhang of its Asian stake, which analysts say accounts for a large part of its $18.6 billion market value.

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.